Experts who have reviewed the U.S. Department of Justice antitrust case against Apple over alleged price fixing of e-books believe that the government will likely lose.

The justice department "has a far better case against the publishers than Apple," Dominick Armentano, professor emeritus of economics at the University of Hartford, said in an interview with CNet. He's not alone, as others believe it will be hard to prove that Apple took part in a "conspiracy" to raise the prices of e-books, as the DoJ has asserted.

The defendants are seen as aided by a series of rulings by the U.S. Supreme Court in the 1970s. Specifically, the court ruled in the 1979 BMI vs. CBS case that "not all arrangements among actual or potential competitors that have an impact on price are per se violations."

Georffrey Manne, an antitrust professor at the Lewis and Clark Law School in Oregon also agreed that the government will have a harder case against Apple than it will against book publishers.

"The government will have to show that Apple had some kind of involvement in the original arrangement," he said.

Complicating matters even further is the fact that Amazon has dominated e-book sales for years, with some going as far as to say that Amazon held a "monopoly" in the market. Publishers were frustrated that Amazon frequently sold e-book titles well below their retail price, and sometimes even at a loss, which would cut out competitors like retail bookstores.

One of the two publishers standing with Apple and fighting the justice department is Macmillan. Responding to the lawsuit filed on Wednesday, Macmillan CEO John Sargent issued a public letter stating that his company did not act illegally or collude in agreeing to switch to an "agency model" for book sales.

"I am Macmillan's CEO and I made the decision to move Macmillan to the agency model," he wrote. "After days of thought and worry, I made the decision on January 22, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now."

Sargent said he has chosen to fight the lawsuit from the justice department because the terms demanded by the DoJ were "too onerous." He feels they would allow Amazon to return to a "monopoly position" that the online retailer was building before most publishers switched to the agency model.

"When Macmillan changed to the agency model we did so knowing we would make less money on our e book business," he said. "We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we believe the agency model is the only way to get there."

Late Apple Chief Executive Steve Jobs himself said publishers aligned with Apple and chose the agency model for pricing because they "hated" Amazon's methods. Jobs said that Amazon had "screwed it up," and drove away publishers.

Speaking with biographer Walter Isaacson, Jobs said Apple courted publishers by offering them the ability to set the price, while Apple would take a 30 percent cut of sales through its iBookstore for iOS. Apple also asked for a guarantee that the iBookstore could match prices if books were sold cheaper elsewhere.

The publishers agreed, and then, according to Jobs, told Amazon that it, too, had to sign a contract to sell books under the agency model.

"Give the situation that existed, that was best for us to do this aikido move and end up with the agency model," Jobs said. "And we pulled it off."

"Give the situation that existed, that was best for us to do this aikido move and end up with the agency model," Jobs said. "And we pulled it off."

I say BS. Imagine if when Microsoft announced their Zune player and with the music industry made Apple up their per song price to $5.
SJ was a master at spinning BS- the biography shows this over and over. He wanted eBook share in line with Apples digital music share hence the iBook store.
The fact that Amazon had to drive their prices up must have given no end to his glee.

I say BS. Imagine if when Microsoft announced their Zune player and with the music industry made Apple up their per song price to $5.
SJ was a master at spinning BS- the biography shows this over and over. He wanted eBook share in line with Apples digital music share hence the iBook store.
The fact that Amazon had to drive their prices up must have given no end to his glee.

Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.

Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.

This post will bring no significant value to it's readers. It is just to say freckledbruh hit that nail right on the head. Period.

Well, I'm gonna wait to see the evidence that backs up the complaint. DoJ thinks they have a case; I'd like to see it go to trial instead of a settlement. If there are illegalities, let's get the courts to review and rule. Regardless who runs Justice, there seems to be this method to threaten suit and getting a settlement somewhere below the cost of litigation instead of having rulings that set legal precedent.

Edit: I'm pleased that Apple and some publishers have the stones to take it to trial.

While this is what I and many others have been saying since this came up I'm sure we'll see another article shortly saying how DoJ has a strong case against Apple.

Quote:

Originally Posted by freckledbruh

Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.

Don't forget they also offered Amazon a higher bit rate, too.

This bot has been removed from circulation due to a malfunctioning morality chip.

Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.

Quote:

Originally Posted by jcdinkins

This post will bring no significant value to it's readers. It is just to say freckledbruh hit that nail right on the head. Period.

No comparison - Amazon wasn't selling a music device as a disguise to sell music.

Well, I'm gonna wait to see the evidence that backs up the complaint. DoJ thinks they have a case; I'd like to see it go to trial instead of a settlement. If there are illegalities, let's get the courts to review and rule. Regardless who runs Justice, there seems to be this method to threaten suit and getting a settlement somewhere below the cost of litigation instead of having rulings that set legal precedent.

Edit: I'm pleased that Apple and some publishers have the stones to take it to trial.

It will NEVER go to trial. There are only two possibilities.

1. Apple will realize it can't win and settle.

2. The DOJ will realize it can't win and withdraw the suit, just like they did with IBM.

No comparison - Amazon wasn't selling a music device as a disguise to sell music.

You may go too far in your allegation - Apple made plenty of money on the hardware too.

But your point is interesting. Apple seems to increasingly rely on the potential for ecosystem sales when designing products. I saw the Apple TV in an Apple Store, and the demo was all about buying more shit (entertainment content, specifically) from Apple.

The Kindle Fire seems to directly fit the model of a product being in large part a conduit for future sales. Some people have spoken badly of it due in large part to that perception.

Will Apple run into any backlash if it increasingly markets hardware that is primarily useful to access more stuff that to be bought from apple?

While this is what I and many others have been saying since this came up I'm sure we'll see another article shortly saying how DoJ has a strong case against Apple.

Don't forget they also offered Amazon a higher bit rate, too.

Totally forgot about that extra advantage as well. Thanks!

Quote:

Originally Posted by I am a Zither Zather Zuzz

Did you read the complaint? It looks like they have plenty of evidence. It does not paint a pretty picture, and I did not fully understand the basis for some of the allegations until I read it.

If the allegations are proven, what will you conclude?

I read the complaint and it seems like a slam dunk against the publishers but not apple. Nowhere did it state that apple was present when the publishers set the price nor any evidence that apple even suggested a price point.

Quote:

Originally Posted by iSheldon

No comparison - Amazon wasn't selling a music device as a disguise to sell music.

Um, this case has nothing to do with device sales period. The complaint mentioned profit from the ebooks themselves and nothing at all about the devices. Also, since you can use kindle on the iPad, what difference would it make anyway? And one last point, you have it backwards. The device isn't the disguise. The content is the disguise. Do you really think apple made billions of dollars selling 99 cent tracks? Puh-leeze.

Um, this case has nothing to do with device sales period. The complaint mentioned profit from the ebooks themselves and nothing at all about the devices. Also, since you can use kindle on the iPad, what difference would it make anyway? And one last point, you have it backwards. The device isn't the disguise. The content is the disguise. Do you really think apple made billions of dollars selling 99 cent tracks? Puh-leeze.

There was a precedent set 100 years ago regarding a manufacturer's ability to enforce retail prices being a restraint of free trade. All a manufacturer could do is set a "suggested" retail price, and the retailer was free to price as they saw fit. That changed in 2008:

Quote:

The decision does not make a resale price agreement automatically legal; it requires that any party challenging a resale pricing agreement has to show that the agreement adversely affects competition. To avoid legal exposure, the manu- facturer must consider all the circumstances surrounding the agreement to ensure that it does not unreasonably restrict competition. Such cir- cumstances may include the number of manu- facturers in a given industry, the manufacturers or retailers size or market power, and whether the agreement is used to facilitate an otherwise illegal pricing agreement among manufacturers or retailers.

For manufacturers or producers of goods, the Leegin decision creates some advantages. A manufacturer that wants to ensure a high price and high margin for its goods at retail can now, in the appropriate circumstances, openly negoti- ate and agree with the retailer about the mini- mum retail price to be charged.

Duh, but that doesn't negate the fact that your hypothetical was a reality that involved amazon. Device or no device, it still happened. Arguing that it didn't solely based on an unrelated matter is disingenuous.

"There might, of course, be an e-mail equivalent of a smoking gun that eventually surfaces, much like those quips from Microsoft executives in the 1990s that indelicately referred to cutting off Netscape's "air supply" and were introduced as evidence in the Justice Department's antitrust case.

But that hasn't happened yet. "I'm not saying that Apple can smile and walk away from this," says Joseph Bauer, a professor of law at the University of Notre Dame. "It's just that the government will have to show that Apple had some kind of involvement in the original arrangement."

Amazon has sold a ton of kindles as well. The big difference between the kindle and iPod is that you cannot take your current book collection and convert it to a e-book, one is forced to get content from Amazon. ITunes allowed one to rip their current music library and put it on the device. I know people with thousands of songs on their iPods and not a single song was purchased thru iTunes.

"Few things are harder to put up with than the annoyance of a good example" Mark Twain"Just because something is deemed the law doesn't make it just" - SolipsismX

Duh, but that doesn't negate the fact that your hypothetical was a reality that involved amazon. Device or no device, it still happened. Arguing that it didn't solely based on an unrelated matter is disingenuous.

If you don't think SJ and Apple wanted to strip eBook market share from Amazon in order to sell iPads than you're too naive for the internet. You think Apple was not active in the eBook negotiations and was just going by what the publishers wanted when SJ was flying back and forth to NY meeting with publisher after publisher?
If you believe that then I got a bridge to sell you in Brooklyn.

Amazon has sold a ton of kindles as well. The big difference between the kindle and iPod is that you cannot take your current book collection and convert it to a e-book, one is forced to get content from Amazon. ITunes allowed one to rip their current music library and put it on the device. I know people with thousands of songs on their iPods and not a single song was purchased thru iTunes.

Ok then it's their fault for not having their own digital content stores in order- not Amazon's.

If you don't think SJ and Apple wanted to strip eBook market share from Amazon in order to sell iPads than you're too naive for the internet. You think Apple was not active in the eBook negotiations and was just going by what the publishers wanted when SJ was flying back and forth to NY meeting with publisher after publisher?
If you believe that then I got a bridge to sell you in Brooklyn.

Apple didn't need to strip ebook market share to sell iPads. Didn't you notice that there were several ebook readers available for iPad (including amazon's kindle) at launch? You seem to think that ebooks is some HUGE draw for the iPad and that really is just not the case. And btw, you are the one who appears naive in your posts.

From original article at AI "Under Amazon's method, publishers would sell their books at wholesale and let the bookseller set its own prices. Amazon repeatedly upset publishers by selling titles at a loss."

Apple broke that monopoly, thank you very much.

DOJ is going after apple instead of amazon for one reason, they have the largest cash horde.

In my opinion it doesn't matter what any one person says. If they say Apple will win, it doesn't matter. It's the US Government. They don't have to win. They are pulling the strings.

Thankfully we don't live in that world. The fact that DOJ "doesn't like something" is irrelevant if they can't prove in court that it's against the law (or at least convince the other party that they might be able to do so).

From original article at AI "Under Amazon's method, publishers would sell their books at wholesale and let the bookseller set its own prices. Amazon repeatedly upset publishers by selling titles at a loss."

Apple broke that monopoly, thank you very much.

DOJ is going after apple instead of amazon for one reason, they have the largest cash horde.

The first part of your post is right on. The last line is just silly.

Going after Amazon for maintaining a monopoly through unfair practices (such as selling books cheaply--below cost) is both hard and not very politically astute. "Curse you Amazon for giving people low-cost books! We'll put a stop to that!" That's a pretty lousy sound bite.

Going after the publishers and Apple for colluding to raise prices is (in theory) much easier to prove and politically very appealing. "DOJ cracks down on publishers and Apple for artificially propping up e-book prices" was a top story on the evening news last night and I'm sure 90% of the audience thought "grr, those damn publishers and Apple." A back-room deal where publishers agreed to not undercut each other on price (if such a thing happened) is illegal price-fixing. DOJ should be cracking down on that. On the other hand agreeing to a new business model that just happens to raise prices... maybe that's ok.

Apple didn't need to strip ebook market share to sell iPads. Didn't you notice that there were several ebook readers available for iPad (including amazon's kindle) at launch? You seem to think that ebooks is some HUGE draw for the iPad and that really is just not the case. And btw, you are the one who appears naive in your posts.

You're missing the boat again. You don't think eBooks sales were a draw for SJ and Apple?
How exactly does Apple make money of other eBook reader sales -at that point in time?
Apple thought eBooks would drive trhe iPad originally hence the iBook store
Read the article please- Jeesh!:

I read the complaint and it seems like a slam dunk against the publishers but not apple. Nowhere did it state that apple was present when the publishers set the price nor any evidence that apple even suggested a price point.

What do you think about the allegations that Apple was complicit in the scheme, and that it would not have worked if not for Apple's part in the whole situation?

Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.

What do you think about the allegations that Apple was complicit in the scheme, and that it would not have worked if not for Apple's part in the whole situation?

Was Apple a patsy? Or did it know what it was doing?

I think apple wanted the agency model for itself and other ebook sellers but didn't actually cross the line and tell the publishers what to charge. I think the illegal aspect of this case came about when the publishers all met and decided on prices across the board as opposed to coming up with their own prices individually (which I think they did in order to insure solidarity against amazon and none of the parties stabbed each other in the back by offering lower prices than the other parties). If it comes up in the case that Apple even suggested a price point to all parties, then I would definitely change my mind. If it comes out that apple knew what the publishers did but figured that that was their own issue, I'm not sure if I'd have an issue with it.

I say BS. Imagine if when Microsoft announced their Zune player and with the music industry made Apple up their per song price to $5.
SJ was a master at spinning BS- the biography shows this over and over. He wanted eBook share in line with Apples digital music share hence the iBook store.
The fact that Amazon had to drive their prices up must have given no end to his glee.

I'm sure he was happy to make money off of goods sold within Apple's (read: paid for and developed by Apple) infrastructure. With that said, Jobs, despite his failings, also valued doing things right and understood the value of any number of given ideas or products. As noted by the writer's guild president, I really don't want to see literature basically devalued with a sweatshop race to the bottom of who can sell these products for the lowest bargain basement prices. I'm perfectly fine with a sales model that values the work of authors rather than treats it as a commodity. Ironically, Jobs argued for lower prices than what the music folks wanted to avoid piracy concerns that would come with higher prices. I also believe this approach keeps the music industry more honest. One of Jobs' underlying philosophies was to basically focus on making a great product and the rest would sort itself out. Additionally, he had no tolerance for people or companies who would try and package mediocrity and try and sell it as something great. In the realm of music, this means that if artists, producers, and the record companies want to sell an album for $10+ then that album needs to have 10 tracks each worth the respective 99 cents (or $1.29), otherwise, people will just buy the few tracks that are great as opposed to the crap that's used as filler.
The scenario is a bit different with books in that not every book is worth the $12.99+ that is oft discussed in this case. With that said, books are not bought and sold based upon whether a chapter is slow or not as exciting as the rest and there is really no way to segment and compartmentalize the product in the way that albums are with the respective songs. In any case, I refer back to my own concern, that the work of authors is not devalued through a typical and sad race to the bottom in prices. Yes, I know we're talking about publishers in this mix but I'm guessing J. K. Rowling et al. are doing just fine with their book contracts.

From original article at AI "Under Amazon's method, publishers would sell their books at wholesale and let the bookseller set its own prices. Amazon repeatedly upset publishers by selling titles at a loss."

Apple broke that monopoly, thank you very much.

DOJ is going after apple instead of amazon for one reason, they have the largest cash horde.

There's nothing against selling items at a loss, these products are known as loss leaders and used in many retail settings. There is the potential for "dumping," but that's usually associated with imports when they are sold in the native market at a higher price.

You're missing the boat again. You don't think eBooks sales were a draw for SJ and Apple?
How exactly does Apple make money of other eBook reader sales -at that point in time?
Apple thought eBooks would drive trhe iPad originally hence the iBook store
Read the article please- Jeesh!:

Just because I do not agree with you doesn't mean I'm missing any boats. I don't think ebooks was any huge draw for the iPad and if negotiations broke down with the publishers over ebooks, apple would have released it anyway with little to no effect on its sales (especially since, as I've mentioned several times, apple had other ereader apps available at the time.